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Edited Transcript of BME.MC earnings conference call or presentation 28-Feb-20 12:00pm GMT

Full Year 2019 Bolsas y Mercados Espanoles SHMSF SA Earnings Presentation

Mar 24, 2020 (Thomson StreetEvents) -- Edited Transcript of Bolsas y Mercados Espanoles SHMSF SA earnings conference call or presentation Friday, February 28, 2020 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Javier Hernani Burzako

Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - CEO & Director

* Marta Bartolomé Yllera

Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - Finance Director & CFO

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Presentation

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Javier Hernani Burzako, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - CEO & Director [1]

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Good morning, everyone. Thank you for attending this results presentation for the full year 2019. Given the specific circumstances that the company has at the moment with the SIX offer that has been launched, I'm going to slightly change the rules of the game that we normally apply to these presentations. And we've got to do things in a slightly different way from what we normally do.

So I should say that we, in BME, have been subject to a tender offer for 100% of the share capital. The offer was launched by SIX on the 18th of November, 2019, for a price of EUR 34 per share. And following the dividend payment in December, this amount has been adjusted to EUR 33.4 per share. The tender offer is subject to the condition of being accepted by shareholders holding 50% plus 1 share of BME's share capital under the required legal authorizations being obtained. Moreover, before CNMV can authorize the prospectus, the explicit authorization of the Council of Ministers, the Consejo de Ministros, is required, which could also be subject to such conditions for the purpose of ensuring that the duties and neutrality and passivity which are required by BME

(technical difficulty)

to any consequences arising from the SIX offer if the transaction was successful. The matters outlined will be dealt with [at the accrual] once the offer's outcome is known.

Regarding the authorization process, the tender offer has already been authorized by the competition authorities. The tender offer is subject to the Council of Ministers' authorization and to a prior report from the relevant autonomous regions of Catalonia, Basque Country and Valencia, the CNMV and BME itself. The CNMV requested that BME issue the report set out in Articles 2 and 4 of the Royal Decree 361/2007, which hasn't yet been delivered to the CNMV. BME is unaware of the exact time frame for the Council of Ministers' authorization of the offer and for the CNMV's subsequent authorization of the prospectus.

Okay. Having explained that, you will understand that we won't be able to accept questions or answer any questions regarding what I've just been talking about.

So the results of the year were as follows. First of all, in the quarter, we've got the figures that you can see there. EUR 122.8 million (sic) [EUR 29.5 million] in net profit for the quarter. That was 2.1 -- 1.5% less than the third quarter of the 2019. And looking at the ratios in the market and our comparison against peers, BME in cost-to-income is in line with the market, slightly better. And we've seen the ratio being affected by a drop in revenues and in ROE. We're head and shoulders above the rest, 31.7% BME compared to an average in the peer group of 18.1%. In operating leverage over the last year, we've grown 4 points above what we had in 2018. So nonvolume-linked revenues are now 126% of total revenues in the company.

Looking at dividends now. I can just say that the accounts that we filed, which will be approved by the AGM, include the payout of a complement -- supplementary dividend of EUR 0.42 per share gross, which is a total of EUR 1.42 per share, which means maintaining the same dividend policy as we've had for several years with the maximum payout possible against our results, which was 96%. And in the supplementary dividend, if approved by the AGM, we will have to pay out on the 8th of May this year at EUR 0.42 per share.

So I'll now hand over to Marta Bartolomé to go on and talk about more details about the different businesses.

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Marta Bartolomé Yllera, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - Finance Director & CFO [2]

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Okay. Let me move on to this analysis. We can see that the different lines are quite similar to others in EBITDA with a slight drop in the contribution from equities because of the fall in volumes.

Moving directly to this business unit, we can see that the revenues from the unit have gone down 12.4% and 13.6% in the quarter and in the year, respectively. And although both the Listing revenues and the Trading revenues have gone down in both periods, the Listing has seen lesser drops, 9.7% and 4.9% in the quarter and the year, respectively, compared to Trading, which went down 13% and 15.7%.

The combination of regulatory and macroeconomic factors has influenced the way the equity market has performed. Expansionary monetary policies and demanding regulatory requirements have led to a mismatch between prices and volumes, which has never been so marked before that way. Although IBEX 35 went up in value, 11.7% in the year, volumes went down over 20%. This reflects the complex scenario in which we are operating.

First of all, analyzing the performance of the Trading revenues, we can see that in the fourth quarter of the year, although cash traded went down only 4.1%, moderating the fall that we were experimenting throughout the year and exceeding that of the previous quarter by nearly 27%, the drop in the number of trades was 16%, in line with the full year figure, and that affected the Trading revenues, which went down 13%.

The yield, which is basically revenues and cash traded, went down against that we got in the third quarter of the previous year largely because of greater instance of block trading, which was 85 basis points in the quarter, which is 19% less than in the same quarter of the previous year, leading to a full year yield of 94 basis points, which is nearly 6% more than last year, which made it possible to moderate the impact of trading -- on Trading revenues of that 20% drop in cash, which I mentioned before.

This performance of the yield is the average after the change that we did in our tariff sheet in which the execution of the high liquidity securities went down 3 basis points, adding other tariffs for different features of the orders put into the system so that we could improve the service and improve our position with better execution of the trades.

And looking at the microstructure of the market, we're very much on the lookout for possible adjustments in the tariffs and other initiatives to encourage trading with incentives to the liquidity given to liquidity providers, which is giving advantages in terms of the performance of the spreads and the market shares. And the share is very stable. At the end of the year, we had 73% market share compared to our peers. And so this tendency is positive.

Additionally, if we look at the spreads, the average spread for the year stands to about 4.91 basis points with the same tendency that we've seen throughout the year, which is to progressively see it going down, contrary to what's happening with the increase of the machine traded funds which, remember, that every month, we publish a report from liquid metrics, which has high-quality indicators on what's happening in the market so that people can track those indicators on our website. That's why we are convinced that these measures are gradually bearing fruit, and we're still studying possible new initiatives here. At the moment, we are implementing tariff for liquidity providers, which provides liquidity to retail books through the European investor book. And we think that it will also be of interest and definitely something that will help retail investors.

Let me now talk about our Listing activity. And as we've already told you, revenues have fallen by 4.9% in the full year. Although I would like to point out the good performance of the MAB with regard to new security, 21 in the year, 6 in the quarter. 17 of those new Listings are REITs and expanding enterprises. With regard to the main market, Grenergy has gone from the MAB to the interconnected 24-hour market. These movements show us that the MAB is a market that really pushes forward companies then onto the main market as well as the variety of segments, apart from real estate, represented by those REITs. There are all sorts of companies from different fields: consulting companies, industrial companies, software companies. So we would hope that they will also continue to help diversify the primary market over the next few years.

With regard to the use of the market as a source of funding through capital increases, the figures, as you can see in the chart are very exciting. The investment flows through the stock exchange are higher than EUR 15 billion, so that's 42.5% (sic) [42.4%] higher than the same figure from last year. That shows you that Spanish companies are still going to the market for funding and have a very balanced debt and capital structures.

Let me go into fixed income now. Let me remind you that, that unit was a unit that had a strategy shift to make it more competitive, more attractive in the new environment of MiFID II, and we've been talking to you about that, haven't we, at the recent presentations. So here, over the full year in 2019, there were some major changes made with regard to Listing tariffs, they fell by around 40% to 50%. The model is ever more open, and we're adapting much more to the needs of our clients and, of course, regulatory compliance. The new bonds that have been admitted from other EU country treasuries are also being successful. Overall, the fixed income trading in our BME platforms increased by 63% mainly because of Spanish public debt, which was up, and also funds from other EU treasuries.

Revenues from Trading increased by 1.1% over the year. Overall, total listings or new trades increased by 4.7%. So that was different from distribution. Private fixed income grew by 48.6%. Our public debt was down 11.7%. Despite other positive activities, revenues from Listing fell by 10% because of that drop in our Listing tariffs that I've just talked about. We believe that, that would reap its rewards in the future, though, as we've seen from the initial repatriations of issuances from big companies like Endesa or Ferrovial and the fact that some of the regional governments have come back to the debt market.

The MARF is becoming more robust as a financing mechanism for SMEs. The increases compared to the volumes that have been admitted to the market are still very excellent figures, almost 63% up for this year. And after the total -- we've seen a total of 78 companies get launched on the market, 6 of them Portuguese. Green bond issuance, social, sustainable bonds have also recorded an increase of 30% in the year. That's EUR 9.75 billion in total. We put Spain in the top 10 now with regard to sustainable bond. With all these factors, total revenues for the -- this business unit fell by 3.9% because of the, but nevertheless controllable, costs that is going on in the unit, (foreign language). The year-to-date figure grew by 11% over the year.

Turning to Derivatives. Revenues were flat over the year, although they did fall by 3.1% of -- in Q4. Performance is mixed, though, with a strong increase of futures over shares in both periods and dividend hedging products. The IBEX linked to options and futures, which are usually the products that give best returns, have a negative performance. 2019 was a year of reduced volatility still. We had, over the last 2 years in accordance with the VIBEX, this implicit volatility, which is the daily average in 2019, dropped by 1.3 points compared to the previous year. Historically, the average is 10 percentage points below the historic average for the VIBEX since 2008. Environments are poor, of course, they're not the right ones for share trading. And of course, the last few days have shown us exactly what the circumstances are.

Although there's just a minor impact on revenues, the energy segment has been very active during the year. And also during the quarter, Q4, it ended with a growth of 114% with regard to the volume traded in megawatt per hour. The unit show -- did grow in cost -- cumulative cost. That's 7.4% up because of the development of new projects, although EBITDA fell by 14%.

The new derivative products, this is xRolling products that we launched in the year, have performed well with -- we've had new members coming to the market, bringing in liquidity and end users.

Clearing is the unit that performed positively during Q4, on the revenue side, up 2.2% and also EBITDA, 2.7% up. Performance was mixed with regard to the different segments that are cleared in BME Clearing. And the good performance of derivatives and energy, however, was offset by a problem with our repos. I think I should point out that BME Clearing started to offer clearing for repos on sovereign debt from a number of European countries during the last quarter of the year: Italy, Portugal, Germany, France, Netherlands and Austria. That's the trend I was talking about with the new interconnection, the linkages with other markets. We've seen that in fixed income as well.

For the full year figure, net revenues were down 2.1%, a mixed performance similar to Q4, but we ended up with that negative net figure. EBITDA was down 7.9% after the incorporation of the costs, including project development.

Settlement & Registration, the performance was good in revenue for the quarter, up 1.7%; EBITDA, up 13.2%. That was practically a flat result for revenues for the year, with growth of EBITDA 3.1%. 2019, remember, Iberclear -- it was a year in which Iberclear obtained its license from the regulator to be able to operate in line with CSD regulation.

During 2019, the most favorable performance on the revenue side was Settlement revenue, up 2.4%. Registration revenue, that contribute more than 60% of the revenues in the unit. End of the year practically flat with a better performance in Q4 helped fundamentally by the increased end market cap figure. So during the year, Iberclear has continued to increase its offering of settlement and cross-border custody services. So the Cross-Border Services project, which is for the key countries in the EU, reached a figure of EUR 10 billion in assets under management, under custody. That shows you once again that new linkage with European countries. Good performance compared to operating costs in the unit in the quarter and the year, took the unit's EBITDA figure to a growth of 13% for the quarter and 3% up for the year.

Market Data & Value-Added Services next. Positive performance on the revenue side, 2.6% up in the quarter, EBITDA practically flat with mixed performances in the 2 segments: the Primary Information Services, up 18%, with growth figures for a number of clients, 3.7% up. Although there was an increase in direct connections, 1.8%; users, down 5.8%. Overall, growth in revenue is practically flat.

The -- what's new in the year, I can mention the dissemination of information generated via xRolling. We also have the Information segment for energy derivatives. And we're also working in the Fixed Income segment to bring in public debt, yield indices as well as the calculation and dissemination of fair value for private fixed income assets that are listed on the BME stock exchange.

Turning to Latin America Exchanges Data project, that's the LED project, the L-E-D. It's proceeding forward at a good pace, will be in production on 11th of March. There's a group of key clients that have shown that they're interested in it. With regard to the data, we've already integrated data from Chile, Peru, Colombia, Mexico and Brazil. And we're working on adding data from other countries to information sources.

Turning to Value-Added Services. The results are still not really matching the number of initiatives that we're undergoing in this strategic transformation for the area. I think with -- over time, we will see good results from the projects. Although the starting point for revenues is always pretty good, almost EUR 28 million in revenue for the year. We're going to continue to promote RegTech Solutions. BME, it helps clients in that way in regulatory compliance processes, digitalization and efficiency process as well. The Best Execution & Transaction Cost Analysis service has recorded growth of 20% in the client base.

With regard to Innovation Labs, we have launched very successfully an artificial intelligence product, which is, SOFIA investment algorithm. The DLT Lab has also launched a pledge constitution service on the blockchain platform, and it has managed to reduce 80% the time for the processes needed for that. We also have Wealthtech, which is a project in Latin America. The team is doing excellent work identifying new opportunities with the combination of new technologies, and BME's position as a neutral entity and a central infrastructure, I think, is good for our clients.

So that's the summary of the business units. And by business unit, we can see that the net revenues from Clearing, Settlement & Registration, Market Data & Value-Added Services are performing positively, as I said. However, these positive data don't offset the performance from Derivatives, Fixed Income and fundamentally, the impact of volumes in Equities. In the year to end, Derivatives, Settlement & Registration and Market Data are pretty well flat. The rest of them in Equities, above all, are explaining what's happening with that 6.2% overall drop compared to 2018. And then in EBITDA, we see good performance in Fixed Income, Settlement & Registration over the year because of the reduction of costs, which we've seen in all the units. However, in the more project-intense units such as, for example, Derivatives, Clearing and Value-Added Services, the performance there is more negative.

Moving on to the financial statements. I should point out that yesterday, the annual consolidated accounts for the group were filed by the Board of Directors and, along with the audit report, will be made available to you on our web page and that of the CNMV, in which we explain the impacts triggered by changes in accounting criteria bubble for the initial application of IFRS 16 on leasing, as we've already been explaining in previous presentations, so I'm not going to talk about it much today.

Regarding the balance sheet, I just want to indicate that the group has assets with use rights for some EUR 16.24 billion and liabilities on leases for EUR 22.37 billion, which is why we see the noncurrent other assets going up and the demand -- long-term demandables.

And we're looking at IFRS 15, although the annual period is like-for-like, the quarterly ones aren't. Moreover, apart from registration, the positions, the CCP and the guarantees managed, the cash position is EUR 259 million to 31st of December 2019 compared to EUR 277 million at the end of 2018, considering the sum of the cash and other liquid assets plus current short-term financial assets. Having done the impairment test on the goodwill in the group, we haven't seen any impairment, which is why we haven't recorded any impact on the P&L or the goodwill values that we have been reporting.

Moving on now to the P&L. I should say that, as we've explained before, the net profit was EUR 29.5 million for the third (sic) [fourth] quarter, down 13.2% year-on-year. And the year-to-date, EUR 122.8 million, down 9.9%. Net total revenues, EUR 285.4 million, down 6.2% year-on-year, the same percentage of reduction that we see in the quarterly net revenues, which was EUR 72.8 million. The operating -- total operating expenses were EUR 115 million for the year, with a drop of 2.2%. And in the quarter, there was an increase of 2.5%.

Looking at costs now. We should give you a breakdown to understand what the different impacts were to explain the underlying performance of such costs. We've got, first of all, the IFRS 16 impact which is a reduction of operating costs over the year of EUR 1.9 million and EUR 468,000 in the quarter, simply because of the way we are accounting them to the books. We should remember that the lines for depreciation and financial expenses goes up EUR 1.4 million and EUR 524,000, respectively, year-on-year, which is why we are pretty well neutral in EBITDA. We also got a one-off of EUR 5.4 million in the year and EUR 1.7 million in the quarter last year. And we've also, this year, recorded one one-off in personnel costs, which accounted for EUR 1.4 million. Therefore, in order to analyze the underlying performance of our cost, we should factor in all these matters.

Also adjusting the effects for the different accounting standards because of the IFRS 16 and the one-offs in both periods, the operating expenses for the year went up 2.8%, in line with the cost guidance that we gave which was 2.5% to 3%, so we're within that. I would like to confirm that this business as usual is pretty well flat, a growth of 0.5% only. And the increase is due to investment in growth projects, 2.3%. And so we can provide comfort regarding the guidance that we've given that we're continuing to maintain the cost control that characterizes our business.

Looking at management indicators, cost-to-income ratio, 40.5%, which shows what I'm saying that we're converging towards our peer group, not on the cost side, so -- which is still well controlled. Return on equity is still high, 31.7% at the year-end, which is 13.6 points above the sector.

And with that, I can hand over to Javier who will talk about the keys to the business and the structural framework.

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Javier Hernani Burzako, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - CEO & Director [3]

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Thank you very much for that. The keys to the business. And let me just talk about 2 developments that Marta has been talking about. As she took you through the market share in markets, this business driver is to do with how we're doing with regard to spread differentials between BME and, in this case, the Chi-X. Since January 2019, when we started off with this liquidity provider scheme that we put in place, the spread has grown -- has widened quite substantially. We have the best spread, and our competitors are much worse. You can look at the graph there, it's pretty self-evident, isn't it? The growth has been almost exponential. The -- it was the right time to do it, and it was the -- a good thing to have, that liquidity provider scheme. Our prices are actually much better than our competitors' right now anyway.

What has actually happened in equity and market share development in the main European exchanges, competitors perhaps joined later, started to compete with us at a later date. But thanks to the different policies that we have been rolling out over recent years, which is the liquidity provider scheme, we ended 2019 with 72.66% total. You can see then the split there between the IBEX 35 and the rest. You've got 72.28% and 81.08% there. So we have been very successful in defending the market share we already had. And I would also say that the quality of our pricing is really at the heart of what we're doing when we're designing and developing all sorts of policies.

I'd also like to give you a very short, but hopefully clear, review on our position in BME, something which we believe is crucial in the EU as we move forward. And that is the Capital Markets Union. I want to really quite clearly state out -- state BME's own position which may be different from the markets. I want you to see how our alignment has been quite logical and natural with these developments. It's in our DNA. It's all part and parcel of the policies that we believe in that have really fitted like a glove with the principles of the CMU. We believe that markets have to be close to the investors, close to companies. We're firm believers of that proximity. And the sources of financing and innovation and ideas have to also be there because this is all about creating jobs and modernizing the ecosystem. We have worked an awful lot on this in Spain, not just with the Madrid Stock Exchange but also with Bilbao, Barcelona and Valencia. We really did everything we can to ensure that we have proximity to the economy, to investors, to companies to create that ecosystem.

This CME -- CMU is an interesting idea. With this -- the Equity Alternative Market, the MAB; the Fixed Income Alternative Market, the MARF; the REITs market segment, these ideas are quite a natural progression for us. They reflect our beliefs and our principle and ratchet up with that financing for innovation, start-ups and nonlisted companies. And also with that key theme of making it easier for companies to enter and raise capital on public markets. We've always been very, very much aware of the importance of sustainability. And with the market development in BME, the FTSE4GOOD IBEX and the Green, Social & Sustainable Fixed Income Issuances, which have also developed -- and I'll take you through that -- that's investing for long-term issuances and investment.

Fostering retail and institutional investment is also important. The retail side has been something that we have been concerned about. A lot of what we have tried to do in a market is to foster the retail segment to be close to our retail clients. And the same goes with regard to diversification of financing. The crisis, the recession showed us that diversification -- market diversification is extremely important for companies, and we've seen that.

Cross-border investment is another key point. We know where we are. We know that we must be a path to link up other markets to facilitate capital flows, capital needs to flow through the pipelines that we are laying out across Europe, and that's why we have played a key role in this development. We have services that already have been operating in settlement and custody, Cross-Border Services, clearing and, of course, foreign public debt trading. Our financial system through these policies is able to use BME very efficiently for cross-border financing.

Those 6 themes, the key themes of the CMU, well, really, we could have almost included those in our own market vision in BME because this is exactly what we believe in and what we do.

Let me just give you some facts and figures here. The fixed income alternative market, MARF, the volume admitted to listing right now is EUR 10.357 billion. It's incredible. Look at that figure. Since 2015, we think there still should be growth there, but it has a lot to do with the growth in SMEs as well because we're trying to help them get the financing to accessible markets. Turning to the MAB, which is the equity alternative market. You can see the figure for capital increases, 2015, EUR 262 million. It's now EUR 1.5 billion in 2019. This is the capability that these alternative -- these companies have to get financing on the market.

Financing for innovation, start-ups and nonlisted companies next. What we're trying to do is help to bring the markets closer to companies so they can raise the capital. And we're working with companies and partners. You can see that in the premarket environment that we've created. This is a growth business. And we believe it is also something that we are doing really to help companies better understand markets, to really bring markets into their growth plan so that they can turn into successful companies and have their [branches], which we're doing that pro bono. The REITs segment, you can see 82 companies admitted there in 2019. That's EUR 25.97 million in market cap.

Turning to investment in long-term infrastructure, sustainable investment. Green, social and sustainable Spanish issues, we've hit an all-time high figure there, clear growth has been recorded. And we believe in promoting this. We want companies to come to BME for support to guide them to be very active in these bond issuances with the social, the green, the sustainable drivers behind them, working towards a sustainable society. Turning to FTSE4GOOD securities, we also pioneered this segment in 2018 under the sustainability heading. And when -- in 2008, it was 27, and it's 48 right now.

Fostering retail and institutional investment next. This is all about creating more markets and more funding for companies. And spreads are important, the quality of the pricing. We talked about before, IBEX 35, performance of spreads. And look at that, it's come down, means better costs and more liquidity and better funding, more funding, more options, more possibilities for investors to invest with a lower transaction price. The same goes for IBEX Small Cap where the spreads have really improved. You can see the figure there for the 87 basis points 2015, up to -- down to 57 in 2019.

But the transaction costs for companies, for investors, of course, turning to the retail market, this is in our DNA. Our retail clients are part of what we're doing. And Spanish companies that we work with, if you look at dividend payments, you can see the dividend yield over the last 32 years. Look at the graph there, Spain has this average yield of 4.04%. You can see 3.8% in U.K.; Italy, 3.3%; and you can see France, Germany; and the U.S. as well, only 2.2%. This has a lot to do with the returns that have been given.

The market. The market, of course, is a place for issuers to diversify the financing and strengthen the balance sheets. And Spain, since the recession, has seen a big increase in number of operations. Here's a couple of increases. There has been a rebalancing through the stock exchange of company financing because they changed and they've deleveraged there, of course, and moved, of course, from fixed income to equity. You can see 139 capital increases recorded in BME in the last year, 2019. It is the market companies turn to for funding. And you can see over the years, there has been this constant trend as companies have tapped the market with capital increases and deleverage. As Marta was telling you, in capital increases, we have EUR 13.3 billion coming into BME through the market in capital increases. This is wonderful for financial rebalancing.

Lastly, the principles of the capital markets I was talking about before have a lot to do with cross-border projects, and we are bearing that in mind. We know that we are part of an integrated market. We know that we have to make it easier and more efficient and cheaper for our companies to channel their flows through the European infrastructure. You can see that we have focused on this strategy.

Basically, what I wanted to highlight is that thinking about the objectives, the themes of the capital markets unit, which is part of the European Union agenda, of course, it links up with MiFID II changes that we've seen there. What we have done throughout these years has been to stick to those principles. Even before they were announced and in the headlines, we were already doing that because it's been part of us, of what we do, it runs through this company, through BME. And we want to do as much as we can to create better markets for companies and have a better ecosystem, creating more jobs. This is always the way BME has worked on a day-to-day basis.

Well, that's the presentation for you today. We know that we will have some questions coming through the Q&A session. The questions always have to be about the content of the presentation, the development and performance of business. Remember the disclaimer I gave you at the beginning.

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Questions and Answers

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Unidentified Company Representative, [1]

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Yes, indeed, we have taken out any questions that didn't refer to the results of the activity or the regulation of our business. So we aren't going to answer those. They've been taken out already. So the questions we've got then, mainly focused on one -- well, we're asked about the balance sheet and what's happening with the change in our tariffs. And we have to take stock of what that means. I'd imagine here, they're talking about equities really because we have had adjustments in other areas, too, but maybe you could talk about the tariff sheet.

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Marta Bartolomé Yllera, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - Finance Director & CFO [2]

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Well, we did mention this as we analyzed the unit. There has been a major change in our tariffs. We did explain about that when we implemented the change. It's all about a lower than 0.3 basis points execution tariff for those companies with a pre-float of more than EUR 1 billion. We've adjusted that figure to EUR 9 billion this year because we need to do -- make these adjustments because of elasticity and compliance with execution, a part of what we're doing in this tariff change, and we're tracking this on an ongoing basis. That is why apart from the liquidity incentives that we've introduced, we've adjusted the parameters around the tariffs slightly. And we're also bringing in liquidity provider fees, those tariffs for the retail segment.

We will, of course, do a lot more fine-tuning there in the business unit as and when we think it is appropriate. Up to now, the goal has always been to a complete -- to comply with Best Execution and make sure that the yield is not affected. It's gone up by 6% almost this year. So we're very happy with the trajectory so far.

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Unidentified Company Representative, [3]

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We're also getting asked if we can give more details about the yield for Q4 because in the annual figure, year-on-year figure, it's down, isn't it?

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Marta Bartolomé Yllera, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - Finance Director & CFO [4]

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Indeed, the yield goes down 19%. There's -- well, in the composition of the yield, there are many factors that come into play: in the type of trading, the type of orders. And the relevant data is the block trade volume in the fourth quarter this year. The block volumes were higher than the average for the year and -- than the same quarter of the previous year, 38% blocks in block trading, and that leads to that drop in the yield.

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Unidentified Company Representative, [5]

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Okay. Then relating to regulation, the announcement of the draft bill regarding tax on financial transactions has led to a lot of interest. So we're asked about our view of possible impacts from such a tax and how long we think it might take before it's implemented.

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Javier Hernani Burzako, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - CEO & Director [6]

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Yes. Well, everybody knows about this. The Council of Ministers in Spain approved this measure just the other day. It's got to go through parliament yet, though, as a proposed tax. So we don't have a lot of visibility on it so far. But what it will require is a period of adaptation of the systems that will, of course, have to be put in place to collect that tax, and we don't have much more visibility on it right now. Our position is well known. What we have to do now evidently is see the impact on the market and come up with the best possible solution that we can to the situation. I can't really tell you much more about it.

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Unidentified Company Representative, [7]

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Marta, a question on costs. We're being asked whether we can give more details on the -- on Derivatives, Market Data, those business units. Why they have a higher -- comparatively higher cost and guidance for cost for the full year?

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Marta Bartolomé Yllera, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - Finance Director & CFO [8]

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Indeed, these units have been cost intensive above all in project-related costs. The percentage and the growth of costs across the board that we're talking about, well, business as usual, is pretty well flat in the growth of cost. So the main costs are coming from new projects. And the way that we book these projects then is in these 3 units, which is why these are the 3 units with the biggest increase in costs. And as for next year, well, we expect in our cost guidance, we're basically sticking to the CPI in the guidance. With a slight reduction in business as usual, we should be able to ensure that investment is basically in projects.

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Unidentified Company Representative, [9]

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Okay. In that case, there aren't any more questions. So we're finished. Many thanks.

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Javier Hernani Burzako, Bolsas y Mercados Españoles, Sociedad Holding de Mercados y Sistemas Financieros, S.A. - CEO & Director [10]

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Okay then. Many thanks for attending this presentation of results. And we will be seeing you again at the end of the first quarter, so many thanks.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]